ACC 205 Week 5 DQs and Journal


Product Description

DQ: 01

Ratios provide the users of financial statements with a great deal of information about the entity.  Do ratios tell the whole story?  How could liquidity ratios be used by investors to determine whether or not to invest in a company?

DQ: 02

Profit Margin

Year Ending December 2012

Year Ending December 2011

Year Ending December 2010

Revenues 40,000 35,000 33,000
Operating Expenses
Salaries 15,000 10,000 9,000
Maintenance and Repairs 6,000 9,000 10,000
Rental Expense 2,500 2,500 2,500
Depreciation 2,000 2,000 2,000
Fuel 4,000 3,500 2,500
Total Operating Expenses 29,500 27,000 26,000
Operating Income 10,500 8,000 7,000
Sales and Administrative Expenses 6,000 4,000 3,000
Interest Expense 2,500 2,000 1,000
Net Income 2,000 2,000 3,000

Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012.  Calculate the profit margin  for each of these years.  Comment on the profit margin trend.

Most Important Ratio Journal 

Reflect for a moment on the ratios (working capital, current ratio, quick ratio, debt to asset, debt to equity, times interest earned, gross margin and net margin) presented this week.  If you were considering investing in a company what ratio would be the most important to you?  Formulate and argument to defend your position.


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